TN wants petro products, liquor out of GST

In 2011-12, Tamil Nadu realised Rs 9,384 crore from sale of petrol, diesel, aviation turbine fuel and kerosene (other than those sold through the public distribution system) and Rs 7,198 crore from alcoholic beverages

The Tamil Nadu government is not in favour of bringing petroleum products and alcoholic beverages in the ambit of goods and services tax (GST).

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In his address at the Empowered Committee of State Finance Ministers at New Delhi, state commercial taxes and registration minister BV Ramanaa said recent media reports stated that some states had agreed that petroleum products could be kept within GST as long as they were allowed to levy additional levies to protect revenue.

“We wish to point out that the Government of Tamil Nadu is not in favour of bringing petroleum products and alcoholic beverages in the ambit of GST," he said.

Tamil Nadu gets a substantial chunk of sales tax revenue from petroleum products and alcoholic beverages, which have been kept out of the VAT chain.

In 2011-12, Tamil Nadu realised Rs 9,384 crore from sale of petrol, diesel, aviation turbine fuel and kerosene (other than those sold through the public distribution system) and Rs 7,198 crore from alcoholic beverages.

The minister said this substantial non-VAT revenue was being collected without any major leakage due to levy on a limited number of dealers at the first point of sale/first, second and third point of sale as the case may be.

“It has been our experience that the tax evasion is more rampant in the goods having short supply chain due to collusion between various players in the chain, for example, in gold bullion, jewellery, furniture. With the current rate of taxation on petroleum products and alcoholic beverages, it is expected that if these are brought under GST, the required state levy component outside GST to ensure revenue neutrality will be very high," he said.